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Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

12/7/2022

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the United States, the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events. In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canadas labour market remains tight, with unemployment near historic lows. While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Banks outlook that growth will essentially stall through the end of this year and the first half of next year. CPI inflation remained at 6.9% in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5%. Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched. https://www.bankofcanada.ca/2022/12/fad-press-release-2022-12-07/
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Housing affordability: Back to the 1980s!

12/2/2022

From National Bank of Canada We remain in the midst of the longest sequence of declining home affordability since the 1986-1989 episode (11 quarters). The magnitude of the deterioration, however, is much more pronounced this time (25.5 p.p. vs. 20.2 p.p. in the 1980s). As a result, the mortgage ona representative home in Canada now takes 67.3% of income to service, the most since 1981. A first since the second quarter of 2019 is the downturn in housing prices that has mitigated slightly the impact on affordability of still rising mortgage rates. Our 5-year benchmark mortgage rate used to calculate our affordability metrics rose 75 bps in the third quarter of the year. While this surge was less significant than the one observed in the previous quarter, it propelled the benchmark mortgage rate to its highest level since 2010. To give an idea of scale, all else being equal, a 75-bps increase represents an extra 300$ (or an 8.1% increase) on the monthly mortgage payment for a representative home in Canada. With our affordability indexes at extreme levels in most markets, we see further declines in housing prices. The slowdown in real estate activity in several markets is expected to result in a cumulative 15% decline in home prices in 2023 from the peak (-7.7% to date). This, combined with a stabilization of the benchmark 5-year mortgage rate, should improve affordability in the coming quarters. HIGHLIGHTS: Canadian housing affordability deteriorated for a seventh consecutive quarter in Q322. The mortgage payment on a representative home as a percentage of income (MPPI) rose 3.8 points, a deceleration from the 10.2-point increase in Q222. Seasonally adjusted home prices decreased 1.1% in Q322 from Q222; the benchmark mortgage rate (5-year term) rose 75 bps, while median household income rose 0.9%. Affordability deteriorated in all the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Victoria, Calgary, Montreal, Toronto, Quebec, Edmonton, Ottawa-Gatineau, Hamilton, Winnipeg. This was the seventh consecutive quarter with a worsening in all markets. Countrywide, affordability deteriorated 2.7 pp in the condo portion vs. a 4.8 pp deterioration in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf
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The housing market has stabilized in October

11/24/2022

Summary On a seasonally adjusted basis, home sales increased 1.3% from September to October, the first monthly gains in eight months. Despite this growth in sales, this should not be seen as the beginning of an upward trend, but more like a stabilization of the market, with sales now 35.6% below their February level. This is the first time in four months that new listings are up with an increase of 2.2% from September to October. Despite the increase in soles, the increase in new listings allowed supply to accumulate, resulting in the number of months of inventory increasing from 3.7 to 3.8 in October. We are not yet seeing a large influx of sellers at this time, so supply is still very low on a historical basis and market conditions are still pointing in the direction of a favourable to sellers market. This situation is also present in the majority of Canadian provinces, while only B.C. and Manitoba close to indicating a favourable to buyers market. Housing starts declined by 31.8K in October to 267.1K (seasonally adjusted and annualized) after having reached their highest level for 2022 in the prior month while the consensus was calling for a decline to 275K. Storts continued to be well above their long-term average, despite still increasing interest rates. The Teranet-National Bank Composite National House Price Index decreased by 0.8% in October compared to the previous month and after seasonal adjustments. Nine of the 11 markets in the composite index were down during the month: Halifax (-4.7%), Hamilton (-2.8%), Winnipeg (-2.4%), Victoria (-2.0%), Quebec City (-1.7%), Toronto (-1.1%), Ottawo-Gotineau (-1.1%), Montreal (-1.0%) and Vancouver (-0.3%). Conversely, the Calgary (+1.8%) and Edmonton (+2.0%) markets were still up. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Canadian home sales edge up from September to October

11/18/2022

Statistics released by the Canadian Real Estate Association (CREA) show national home sales edged a little higher in October 2022. HIGHLIGHTS National home sales were up 1.3% on a month-over-month basis in October. Actual (not seasonally adjusted) monthly activity came in 36% below October 2021. The number of newly listed properties edged up 2.2% month-over-month. The MLS Home Price Index (HPI) declined by 1.2% month-over-month and was down 0.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 9.9% year-over-year decline in October. https://stats.crea.ca/en-CA/
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Teranet-National Bank House Price Index - Canada: A second consecutive record decline in September

11/10/2022

From National Bank of Canada In September, the seasonally adjusted composite index fell by 2.0%, matching the previous months record decline and representing a fifth consecutive monthly contraction. Since its peak in May, the composite index (not seasonally adjusted) has already declined by 7.0%, whereas during the 2008 financial crisis, prices fell by only 6.2% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have experienced the most significant declines to date. As a result, the price correction is expected to be more significant in Ontario, British Columbia and the Maritimes, while it is expected to be less significant in the Prairies, which are favoured by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 2.0% in September compared to the previous month and after seasonal adjustments. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), Toronto (-1.8%), Winnipeg (-1.7%), Ottawa-Gatineau (-1.0%), and Quebec City (-0.1%). Conversely, the Calgary (+1.2%), Halifax (+1.1%) and Edmonton (+0.2%) markets were still up. From September 2021 to September 2022, the composite index increased by 6.0%. This growth was driven by Halifax (16.4%), Calgary (14 .7%) and Montreal (10.5%). Growth was lower than average in Winnipeg (5.9%). Hamilton (5.6%), Edmonton (5.6%), Ottawa-Gatineau (5.0%), Victoria (4.7%), Toronto (4.5%) and Vancouver (3.9%). https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
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Canada: Home sales and new listings continued to slide in September

11/4/2022

From National Bank of Canada On a seasonally adjusted basis, home sales fell 3.9% from August to September, bringing the level of sales 18.9% below its 10-year average. This was the seventh consecutive decline for this indicator, with sales down a cumulative 36.2% between February and September. Declines were observed in every province and in 60% of all local markets. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 0.8% between August and September, a third monthly drawback in a row. Overall, the number of months of inventory rose from 3.5 to 3.7 months in September, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are still indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Alberto, Saskatchewan, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 32.2% compared to the second-strongest month of September in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-45.2%) and the smallest in Saskatchewan (-7.3%). For the first three quarters of 2022, cumulative sales were down 21.9% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

10/27/2022

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 4% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russias attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down. In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity. The Bank projects no growth in the US economy through most of next year. In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages. Chinas economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth. Overall, the Bank projects that global growth will slow from 3% in 2022 to about 1% in 2023, and then pick back up to roughly 2% in 2024. This is a slower pace of growth than was projected in the Banks July Monetary Policy Report (MPR). In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economys ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services. https://www.bankofcanada.ca/2022/10/fad-press-release-2022-10-26/
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CMHL Housing Supply Report - Canadian Metropolitan Areas

10/20/2022

Highlights After a boom recorded last year, housing starts in the countrys six largest census metropolitan areas (CMAs) fell 5% in the first half of 2022. The decrease observed for apartments (-9%) is the main cause of this drop. On an annualized basis, however, housing starts in the first half of 2022 remained high compared to the level of construction over the past five years. Additionally, there was a lot of contrast between the six urban centres studied. Indeed, in the first half of the year, housing starts were up in Edmonton, Calgary and Toronto, while declines were observed in Vancouver, Ottawa and Montral. The effects of rising interest rates and construction costs could have an even greater impact on housing starts in the coming months. New data on physical construction time for housing reveal important differences across centres and dwelling types, which has an impact on the affordability of the end product. Cities that build a lot of large, tall apartment structures will risk having housing construction sectors that are less responsive to a rapid need for new housing units. This is consistent with what is observed in Vancouver and Toronto. Low-rise apartment structures, such as those built in abundance in Montral, take much less time to build than taller apartment structures with a similar number of units. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2022-11-en.pdf?rev=74c50e35-d0a7-4131-b6a5-5829967ed5d1
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The road ahead for the economy and housing — fall 2022 update

10/14/2022

Highlights Inflationary pressures have been stronger and more persistent than expected since we published our Housing Market Outlook in April 2022. This has led to significantly sharper than predicted interest rate hikes in Canada and other economies. Interest rates are expected to rise further given the need to reduce inflation. The Canadian economy will enter a modest recession by the end of 2022 and start recovering in the second half of 2023. The national house price is expected to decline by close to 15% by Q2 2023 from its historical peak in Q1 2022 as housing demand slows with rising interest rates and deteriorating economic and income conditions. Despite this house price decline, ownership affordability will not improve as the benefit from lower prices will be offset by rising interest rates. Rental affordability pressures will increase with rental demand as fewer renter households can access ownership. https://www.cmhc-schl.gc.ca/en/blog/2022/road-ahead-economy-housing-fall-2022-update
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To buy or to rent: The housing market continues to be reshaped by several factors as Canadians search for an affordable place to call home

10/13/2022

The homeownership rate falls The proportion of Canadian households who own their homeor the homeownership rate (66.5% in 2021)is on the decline in Canada after peaking in 2011 (69.0%). The growth in renter households (+21.5%) is more than double the growth in owner households (+8.4%). Adults under the age of 75 were less likely to own their home in 2021 than adults in that age range a decade earlierespecially young millennials aged 25 to 29 years (36.5% in 2021 vs. 44.1% in 2011). A large share of newer builds are rentals Recently built dwellings are increasingly likely to be occupied by renters40.4% of the housing built in the five years ending in 2021 was tenant-occupied, the highest tenant rate next to that of dwellings built in the 1960s post-war apartment boom, at 44.5%. Over one-third of recently built dwellings, those constructed from 2011 to 2021, were occupied and primarily maintained by millennial (36.6%) renters or owners in 2021, the largest share of any generation. Millennials also represented the largest share of condominium occupants (30.2%) compared with the other generations. The share of condominiums continues to rise The rising trend of condominium construction continuesthe share of occupied dwellings that are condominiums edged up from 13.3% in 2016 to 15.0% in 2021. Most condominiums (90.0%) are located in Canadas large cities, known as census metropolitan areas (CMAs). In Canadas CMAs, condominiums made up 39.9% of the occupied stock in the primary downtowns in 2021, and half of these downtown condos were being rented out by investors. Home values continue to surge through 2021 Expected home values rose in large and small municipalities (census subdivisions [CSDs]) in Ontario and British Columbia from 2016 to 2021. Among CSDs, 77.8% in Ontario and 46.1% in British Columbia saw the average expected value of homes rise by over 50%. Differences in the impact of temporary COVID-19 benefits on household incomesfor renters and for homeownerswere a key contributor to the different degrees of improvement in housing affordability seen for each group, from 2016 to 2021. Canadians find their housing more affordable in 2021 because of higher incomes The rate of unaffordable housing, or the proportion of households that spent 30% or more of their income on shelter costs, fell from 24.1% in 2016 to 20.9% in 2021. The rate of unaffordable housing in Canada for renters fell from 40.0% in 2016 to 33.2% in 2021, with most of the decline occurring among renters earning below the median household income of all renters (68.4% in 2016, compared with 56.0% in 2021). https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm
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Home sales fell for a sixth consecutive month in August

9/29/2022

From National Bank of Canada On a seasonally adjusted basis, home sales fell 1.0% from July to August, bringing the level of sales 14.4% below its 10-year average. This was the sixth consecutive decline for this indicator, with sales down a cumulative 32.5% between February and August. Declines were observed in every province at the exception of Ontario, due notably to a rebound in sales in the GTA. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 5.4% between July and August. Overall, the number of months of inventory rose from 3.4 to 3.5 months in August, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are now indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 24.7% compared to the second-strongest month of August in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-40.0%) and the smallest in Saskatchewan (-2.2%). For the first eight months of 2022, cumulative sales were down 20.7% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Teranet-National Bank House Price Index - Canada: Record price drop in August

9/22/2022

From National Bank of Canada In addition to recording a fourth consecutive monthly decline on a seasonally adjusted basis, the Teranet-National Bank Composite House Price Index experienced its largest contraction ever in a single month (-2.1%) due to rapidly rising interest rates and a slowing resale market. This historic drop broke the previous record of -1.3% recorded in July 2010. Augusts data were also unique in that the declines extended to almost all the 31 cities covered by the index, except for the three CMAs located in Alberta (Calgary, Edmonton and Lethbridge), which is unprecedented. The reason for these isolated increases is obviously the high price of energy and many commodities that drive the economy in this province. Since its peak in May 2022, the composite index has already fallen 4.1%, led by significant declines in Hamilton (-10.5%). Halifax (-8.7%) and Toronto (-8.3%). Significant price declines were also observed in several cities not included in the composite index, including Abbotsford-Mission and many cities in the Golden Horseshoe (Brantford, Oshawa, Barrie, Kitchener, Guelph, and Peterborough). It should be noted, however, that the significant declines in these cities follow dramatic price increases since the start of the pandemic. As the Bank of Canada continues to raise its policy rate into restrictive territory, we expect the composite index to decline from its peak reached earlier this year by 10%-15% by the end of 2023. This assumes a policy rate that tops out below 4.0% and a Bank of Canada that begins to lower interest rates in the second half of 2023. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
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CREA Quarterly Forecasts

9/16/2022

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations in 2022 and 2023. With interest rates on the rise, home sales have continued to cool. In some parts of the country, home prices have fallen from their peaks reached earlier this year, are flat in some regions, and are still climbing in others. The issue of not enough homes for sale has not gone away. Some 532,545 properties are forecast to trade hands via Canadian MLS Systems in 2022, a decline of 20% from the 2021 annual record. The downward revision from CREAs June forecast was mostly the result of a downward revision to sales activity in Ontario, along with smaller revisions in B.C., Alberta and Quebec. The national average home price is forecast to rise by 4.7% on an annual basis to $720,255 in 2022. That said, much of that increase reflects how high prices were to start the year. Annual price gains are forecast to be largest in Quebec and the Maritimes. National home sales are forecast to edge back a further 2.3% to 520,156 units in 2023. The national average home price is forecast to slide mostly sideways (+0.2%) from 2022 to 2023 at around 722,000. https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/
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Bank of Canada increases policy interest rate by 75 basis points, continues quantitative tightening

9/7/2022

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 3% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. The global and Canadian economies are evolving broadly in line with the Banks July projection. The effects of COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine continue to dampen growth and boost prices. Global inflation remains high and measures of core inflation are moving up in most countries. In response, central banks around the world continue to tighten monetary policy. Economic activity in the United States has moderated, although the US labour market remains tight. China is facing ongoing challenges from COVID shutdowns. Commodity prices have been volatile: oil, wheat and lumber prices have moderated while natural gas prices have risen.
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Prices have come down from their peak in July

8/24/2022

From the National Bank of Canada Declining transactions in the resale market and rising interest rates continue to weigh on property prices, with the Teranet-National Bank Composite House Price Index falling 0.2% from June to July after seasonal adjustments. This is the first monthly decline since the one seen at the beginning of the pandemic in June 2020. Using the unsmoothed seasonally adjusted index, which is more sensitive to market fluctuations, the decline is even more pronounced, with property prices falling 1.4% from June to July. Moreover, price decreases continue to be widespread across the country. In fact, for all 32 markets where the seasonally adjusted unsmoothed index was available in July, 58% experienced a decline during the month, the same proportion as observed in June, but much higher than those recorded since the beginning of the year. You have to go back to May 2020, at the very beginning of the pandemic when uncertainty was at its peak, to find such a large proportion of markets down. While the Bank of Canada has indicated that it will continue to raise its policy rate and that transactions in the real estate market should continue to decline, we anticipate that the composite index should decrease by 10% by the end of 2023. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
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Home sales continued to fall in July

8/18/2022

From the National Bank of Canada On a seasonally adjusted basis, home sales fell 5.3% from June to July, bringing the level of sales 12.8% below its 10-year average. This was the fifth consecutive decline for this indicator, with sales down a cumulative 31.1% between February and July. The slowdown was broad- based, with the number of transactions declining in three-quarters of the markets covered. We expect the current moderation in sales to continue going forward as the Bank of Canada is expected to raise its overnight rate further in September. The rapid rise in interest rates by the central bank is certainly having a psychological effect on buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates also seem to be having an effect on sellers who are postponing their decision to sell to a later date. Indeed, new listings declined 5.3% between June and July. Overall, the number of months of inventory rose from 3.1 to 3.4 months in July, the highest level in two years. Based on the active-listings-to-sales ratio, market conditions loosened in every province during the month, and the housing market in the country as a whole is now on the verged of indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba, Ontario and P.E. (the latter having switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 29.3% compared to the second-strongest month of July in history last year. For the first seven months of 2022, cumulative sales were down 20.3% compared to the same period in 2021. Housing starts in Canada decreased for the first time in three months, dropping 8.3K in June to 273.8K (seasonally adjusted and annualized), in line with consensus expectations calling for a 274K print. With high commodity prices, labour shortages, and ongoing supply chain issues, this moderation in housing starts was expected and should continue in the coming months. However, with building permits remaining high and housing supply still tight, this moderation should stabilize at levels that remain strong on a historical basis. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Higher interest rates and household debt: Cause for recession?

8/10/2022

From National Bank of Canada There is a great deal of concern regarding the vulnerability of Canadian households not only to inflation shock but also to sharp interest rate hikes. For heavily indebted households, the bill could prove hefty. Those that contracted mortgages 4.Sx their gross income could see their monthly payments increase by $187 to $281 from 2022 to 2024 and absorb as much as 2.6% to 4.0% of their net income. At the macroeconomic level, however, the story is far different given the high proportion of properties without mortgages. By our calculations, the payment shock related to servicing the accumulated debt will represent 0.65% of disposable income over the next three years. The amount is significant but manageable in that it alone will not suffice to pull the economy into a recession. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/special-report_220728.pdf
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Prices continue to lose momentum in June

8/3/2022

With the decrease in resale market transactions and the increase in interest rates, property price growth moderated for a third consecutive month, but still remained solid in June at 1.0% after adjusting for seasonal effects. Using the seasonally adjusted unsmoothed index, which is more sensitive to market fluctuations, the moderation is even more pronounced, with property prices essentially flat in May and June. While the Bank of Canada has indicated that it will continue to raise its policy rate and that transactions in the real estate market should continue to decline, we anticipate that the composite index should decrease by 10% by the end of 2023. The price declines have already begun to spread across the country. In fact, for all 32 markets where the seasonally adjusted unsmoothed index was available in June, 58% experienced a decline during the month, compared to 34% in May and only 16% in January. We have to go back to May 2020, at the very beginning of the pandemic when uncertainty was at its peak, to find such a large proportion of markets in decline. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
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CANADA: Home sales continued to fall in June

7/22/2022

From National Bank of Canda On a seasonally adjusted basis, home sales fell 5.6% from May to June, bringing the level of sales 7.0% below its 10-year average. This was the fourth consecutive decline for this indicator, with sales down a cumulative 26.8% between February and June. The slowdown was broad- based, with the number of transactions declining in three quarters of the markets covered. We expect the current moderation in sales to continue going forward as the Bonk of Canada just announced a 1% rate increase this week and more rate hikes are expected by the end of the year. Now that interest rates for variable rate mortgages are generally over 4%, buyers must now qualify for the stress test with their mortgage rate +2% instead of a rate of 5.25%, which will add a drag on the market. The rapid rise in interest rates by the central bank is certainly having a psychological effect on buyers who are waiting to see how high rates will stabilize before taking action. According to CREA, new listings rose 4.1% in June, a second consecutive monthly increase. With the reduction in sales and the increase in new properties for sale, the number of months of inventory rose from 2.7 to 3.1 months in June, the highest level in two years. Based on the active-listings-to-sales ratio, market conditions loosened in every province during the month, but the housing market continued to be tight in the country as a whole. Five provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba and Ontario (the two latter having switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 23.9% compared to the strongest month of June in history last year. For the first semester of 2022, cumulative sales were down 18.9% compared to the same period in 2021. Housing starts in Canada increased for a second month in a row by 21.5K in May to 287.3K (seasonally adjusted and annualized), the strongest print since November 2021 (at 305.9K). Starts were well above consensus calling for a 255K print in May while building permits remained high on a historical basis and housing supply continues to be tight. As interest rates rise and demand in the resale market declines, we expect housing starts to moderate in the coming year. Data on housing starts in June will be published on July 18. The Teranet-National Bank Composite National House Price Index increased 1.6% in May compared to April and after seasonal adjustment. Ten of the 11 markets in the composite index were up during the month, with Edmonton being the exception. On a year-over-year basis, home price increased by 18.3% in May. The June Teranet -National Bank HPI will be published on July 20. Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Monetary Policy Report Press Conference Opening Statement; Bank of Canada increases policy interest rate by 100 basis points, continues quantitative tightening

7/14/2022

From Tiff Macklem - Governor Good morning. Im pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss todays policy announcement and the Banks Monetary Policy Report (MPR). Today, we raised the policy interest rate by 100 basis points, or 1%. An increase of this magnitude at one meeting is very unusual. It reflects very unusual economic circumstances: inflation is nearly 8%a level not seen in nearly 40 years. I want to explain to Canadians why weve made this decision. There were three key considerations. First, inflation is too high, and more people are getting more worried that high inflation is here to stay. We cannot let that happen. Restoring price stabilitylow, stable and predictable inflationis paramount. Second, the Canadian economy is overheated. There are shortages of workers and of many goods and services. Demand needs to slow so supply can catch up and price pressures ease. And third, our goal is to get inflation back to its 2% target with a soft landing for the economy. To accomplish that, we are increasing our policy interest rate quickly to prevent high inflation from becoming entrenched. If it does, it will be more painful for the economyand for Canadiansto get inflation back down. With these important considerations in mind, the Governing Council decided to front-load the path to higher interest rates today. This is our fourth consecutive interest rate increase since March. We know that higher interest rates will add to the difficulties that Canadians are already facing with high inflation. But the strain of higher interest rates in the short term will bring inflation down for the long term. It will get us to the other side of this difficult period and back to normal. Things are not normal right now. After 30 years of low, stable inflation, many Canadians are experiencing the pain of high inflationand the uncertainty that comes with itfor the first time. Over half of the components in the consumer price index (CPI) basket are rising above 5%. When inflation is this high, it erodes the purchasing power of every Canadian. The drivers of inflation are the same in Canada as in most countries. The war in Ukraine and continued supply chain disruptions have boosted inflation in Canada and around the world. But what started as global inflation driven by higher global energy and goods prices is broadening here at home. Inflation is broadening because the Canadian economy is in excess demand. There arent enough goods and services to meet the demand were seeing as people enjoy a fully reopened economy. Employers cant find enough workers and theyre increasing wages to attract and retain staff. With households spending robustly, businesses are passing on higher input and labour costs by raising prices. Higher interest rates will help slow demand and allow supply time to catch up. Consumer spending will moderate as the pent-up demand from pandemic restrictions eases and the cost of borrowing increases. Housing market activity is already cooling rapidly from unsustainably high levels during the pandemic. And slower global growth will reduce demand for our exports. Taking all of this into account, we are forecasting annual growth in economic activity will be around 3% this year, 1% next year and 2% in 2024. As global bottlenecks gradually resolve and tighter monetary policy works its way through the economy, inflation will start to come down. While we may see a few more months with CPI inflation around 8%, we expect it to decline later this year, ease to about 3% by the end of next year and return to the 2% target by the end of 2024. This is the soft landing we are projecting. Interest rate increases can cool demand and inflation without choking off growth or causing a surge in unemployment. Some sectors will be more affected by interest rate increases than others, but the very tight labour market means there is room to reduce the number of job vacancies without having a big impact on overall employment. And with the prices of many of the commodities we export expected to remain elevated, the global forces slowing growth will not affect Canada as much as many other countries. But the path to this soft landing has narrowed because elevated inflation is proving more persistent. And this requires stronger action now so consumers and businesses can be confident that inflation will return to its 2% target. Our decision today takes the policy interest rate to 2%. That puts it in the long-run neutral range that neither stimulates nor restricts growth. We estimate that range to be between 2% and 3%. We continue to expect that interest rates will need to rise further to cool demand and achieve the inflation target. How high our policy rate needs to go will depend on how the economy and inflation evolves. By front-loading interest rate increases now, we are trying to avoid the need for even higher interest rates down the road. Front-loaded tightening cycles tend to be followed by softer landings. This argues for getting our policy rate quickly to the top end or slightly above the neutral range.
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Provincial Economic Forecast: Alberta and Saskatchewan to Top Growth Leaderboard This Year

7/8/2022

Weve downgraded our 2022 growth forecasts in most provinces by 0.1-0.9 percentage points compared to our March forecast, as a steeper climb in borrowing costs and persistently elevated inflation crimp household and business spending across the country. Real GDP is now projected to run from 1.4% in Newfoundland and Labrador to 5.5% in Alberta. The good news is that most regional economies appear to have entered the summer in solid form, leaving a cushion to absorb these shocks. As in recent months, households in the Atlantic region are expected to face the most intense inflation pressures in the near term, given the relatively high share of household budgets taken up by food and energy products. However, household debt burdens in the Atlantic (alongside Quebec and Saskatchewan) tend to be comparatively small. The opposite is true in Ontario and B.C., likely increasing the sensitivity of households to higher interest rates. Meanwhile, the Prairie and B.C. economies should continue to benefit from higher prices for agricultural and energy commodities, providing a strong counterbalance to the financial headwinds on households in those regions. Averaging around $110 per barrel in the second quarter, crude oil prices have moved in line with our March forecast. We project an even higher level for prices in the third quarter, before they gradually fall back towards $100 per barrel by year end on the back of a reduced fear premium, some demand destruction and modestly higher global supply. In the recently concluded provincial budget season, several governments committed to rolling out relief to households to help them cope with inflation. Notably, government spending should provide a tailwind to expansions. In aggregate, the Provinces are projected to remain in deficit over the medium term, while little headway will be made on reducing debt-to-GDP ratios. Housing markets are retrenching under the weight of higher interest rates. Home sales are down across nearly all provinces since February, while average home prices have dropped in Alberta, B.C. and especially Ontario. We believe that there is further downside left for markets as rates climb, and are forecasting continued declines in home sales and prices through the remainder of the year. Source: https://economics.td.com/provincial-economic-forecast
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Home sales plunged as interest rates continued to rise in May

6/30/2022

On a seasonally adjusted basis, home sales slumped 8.6% from April to May, bringing the level of sales slightly below its 10-year average for the first time in 24 months. This decline also represents a third consecutive decrease, with sales down a cumulative 23.0% between February and May. The downward trend is now well established in the country as 75% of the markets have seen their number of transactions decrease during the month. We believe this market moderation should continue in the coming months as the tightening of monetary policy should push variable rates higher and make the stress test even more biting for buyers. Indeed, the stress test uses the higher of 5.25% or the contractual interest rate +2%. Until now, only customers opting for a fixed rate had to qualify with a rate of more than 5.25%. With the Bank of Canada policy rate increase expected in July, the qualification for a variable rate will also exceed 5.25%, a development that should cool the market further since over half of new mortgages are at variable rates. According to CREA, new listings rose 4.5% in May, the first increase in three months. With the reduction in sales and the increase in new properties for sale, the number of months of inventory rose from 2.3 to 2.7 months in May, its highest level since July 2020. Based on the active-listings-to-sales ratio, market conditions loosened in almost every province during the month, but the housing market continued to be tight in the country as a whole. There are now 3 provinces out of 10 in balanced territory; B.C., Saskatchewan, and Alberta (the latter switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales fell 21.7% compared to the strongest month of May recorded in 2021. For the first five months of 2022, cumulative sales were down 17.8% compared to the same period in 2021. Housing starts in Canada increased for a second month in a row by 21.SK in May to 287.3K (seasonally adjusted and annualized), the strongest print since November 2021 (at 305.9K). Starts were well above consensus calling for a 255K print in May while building permits remained high on a historical basis and housing supply continues to be tight. As interest rates rise and demand in the resale market declines, we expect housing starts to also moderate in the coming year. The Teranet-National Bank Composite National House Price Index increased 2.0% in April compared to March and after seasonal adjustment. On a year-over-year basis, home price increased by 18.8% in April. Ten of the 11 markets in the composite index were up during the month, with Edmonton being the exception. Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Canada’s Housing Supply Shortages: Estimating what is needed to solve Canada’s housing affordability crisis by 2030

6/24/2022

Were in a housing crisis. This report looks at the overall affordability for the entire housing system in Canada. The report has taken steps to estimate how much additional housing supply is required beyond current trends to restore housing affordability by 2030. Key Highlights CMHC projects that if current rates of new construction continue, the housing stock will increase to close to 19 million housing units by 2030. To restore affordability, CMHC projects Canada will need an additional 3.5 million units. Two-thirds of the 3.5 million housing unit gap is in Ontario and British Columbia where housing markets are least affordable. Additional supply would also be needed in Quebec, a province once considered affordable. It has seen a marked decline in affordability over the last few years. Other provinces remain largely affordable for a household with the average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada. Source: https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-research/research-reports/accelerate-supply/housing-shortages-canada-solving-affordability-crisis
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Housing Experiences in Canada: Persons with disabilities

6/17/2022

The Housing Experiences in Canada series of fact sheets highlights the diversity of housing situations experienced by different groups of people living across Canada. This fact sheet focuses on persons with disabilities living in private dwellings. Statistics below are derived from the 2017 Canadian Survey on Disability (CSD). The 2017 CSD identifies persons with disabilities based on responses to the disability screening questions in the survey. Since this fact sheet focuses on persons with disabilities in private dwellings, those living in collective dwellings such as hospitals and nursing homes are not included in the data. The National Housing Strategy Act (2019) declared that the right to adequate housing is a fundamental human right affirmed in international law. Adequate housing is understood in international law as housing that provides secure tenure; is affordable; is habitable; provides access to basic infrastructure; is located close to employment, services and amenities; is accessible for persons of all abilities; and is culturally appropriate. Source: https://www150.statcan.gc.ca/n1/pub/46-28-0001/2021001/article/00011-eng.htm
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Canadian Housing Statistics Program, 2019 and 2020

6/10/2022

New data from the Canadian Housing Statistics Program (CHSP) show the extent of inequalities in housing: multiple-property owners possess nearly one-third of all residential properties and the top 10% wealthiest owners account for around one-quarter of residential housing value. Despite these inequalities, new data show an increase in the number of first-time home buyers from 2018 to 2019. The data tables accompanying this release have been updated for the 2020 reference year, and expanded to include owners in Newfoundland and Labrador, Yukon, the Northwest Territories, and Nunavut. A new table on home buyers has also been added, covering Nova Scotia, New Brunswick, British Columbia and Yukon. These data provide a snapshot of property owners and buyers in the period prior to the outbreak of the COVID-19 pandemic. Multiple-property owners own 31% of residential properties in Ontario In addition to their primary residences, multiple-property owners hold properties to receive rental income or for other investment purposes, or as a recreational property which may also provide rental income. Owners seeking additional properties contribute to increased competition in already tight real estate markets, making it more difficult for prospective homeowners to purchase a home. The overall impact of such holdings on housing prices and housing affordability, however, depends on a multitude of factors that are not fully assessed in this release. Individual multiple-property owners hold a significant share of the residential property stock, despite accounting for a relatively small number of owners. In Nova Scotia, New Brunswick, Ontario, and British Columbia in 2020, these owners held between 29% (British Columbia) and 41% (Nova Scotia) of the property stock while accounting for 15% (British Columbia) to 22% (Nova Scotia) of owners. Source: https://www150.statcan.gc.ca/n1/daily-quotidien/220412/dq220412a-eng.htm
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Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening

6/1/2022

The Bank of Canada today increased its target for the overnight rate to 1%, with the Bank Rate at 1% and the deposit rate at 1%. The Bank is also continuing its policy of quantitative tightening (QT). Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April well above the Banks forecast and will likely move even higher in the near term before beginning to ease. As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored. The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, Chinas COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022. US labour market strength continues, with wage pressures intensifying. Global financial conditions have tightened and markets have been volatile.
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Building construction price indexes, first quarter 2022

5/27/2022

National Overview Residential building construction costs increased 5.6% in the first quarter of 2022, the highest increase since the second quarter of 2021. Non-residential building construction costs were up 2.6% in the first quarter. Contractors surveyed attributed part of the growth in building construction costs to the rise in labour costs, and a surge in the number of vacancies for construction trades has contributed to increased wages in these occupations. In addition, amid rising fuel prices, contractors cited that a larger share of their expenses were now allocated to the transportation of their building materials. Increase in price growth for residential building construction Growth in residential building construction costs accelerated during the first quarter of 2022, after moderating in the previous two quarters. The majority of the 11 census metropolitan areas (CMAs) covered by the survey recorded larger quarterly increases than the previous two quarters. Rising residential construction costs were largely driven by rebounding softwood lumber prices. Costs to construct residential buildings increased the most in Calgary (+6.9%), followed by Edmonton and Toronto (both up 6.8%). While the construction costs to build a single-detached house in Toronto grew the most in the first quarter, the cost to build townhouses rose the most of all the buildings in scope for the survey in both Calgary and Edmonton. It is interesting to note that the rise in residential construction costs in Calgary and Edmonton coincided with the highest monthly increases recorded in new housing prices in over 15 years, with Calgary recording its recent high in March 2022 (+5.2%) and Edmonton reaching its recent high in February (+3.7%). Source: https://www150.statcan.gc.ca/n1/daily-quotidien/220505/dq220505b-fra.htm?indid=18843-2indgeo=0
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Home sales drop in April as mortgage rates shoot higher

5/16/2022

Home sales recorded over Canadian MLS Systems dropped by 12.6% between March and April 2022. The decline placed monthly activity at the lowest level since the summer of 2020. While the national decline was led by the Greater Toronto Area (GTA) simply because of its size, sales were down in 80% of local markets, with most other large markets posting double-digit month-over-month declines in April. The exceptions were Victoria, Montreal and Halifax-Dartmouth where sales edged up slightly. The actual (not seasonally adjusted) number of transactions in April 2022 came in 25.7% below the record for that month set last year. That said, as has been the case since last summer, it was still the third-highest April sales figure ever behind 2021 and 2016. Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue, said Jill Oudil, Chair of CREA. For buyers, this slowdown could mean more time to consider options in the market. For sellers, it could necessitate a return to more traditional marketing strategies. Of course, there are significant regional differences, so your best bet is to contact your local REALTOR. They have the information, guidance negotiation skills to help you navigate this rapidly-changing market as it evolves, continued Oudil.
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National Bank of Canada: Home sales declined in March. Beginning of a downward slide?

5/5/2022

By Daren King On a seasonally adjusted basis, home sales decreased 5.4% from February to March, a first monthly decline in three months. Despite this decline, the resale market remained very active on a historical basis, standing above the historically high level of 45K now for 21 consecutive months. Is this the beginning of a downward trend in the Canadian real estate market? In our opinion, the housing market should remain active during the spring due to many people who have secured advantageous interest rates and will want to act before the end of their interest rate guarantee. However, with the recent increase in mortgage interest rates and the worst affordability conditions on record, we expect the residential market to slow down in the second half of the year. According to CREA, new listings decreased by 5.5% during the month. However, the reduction in sales compensated for the decrease in new properties for sale, so that the number of months of inventory rose from its historical low of 1.6 to 1.8 months in March. Based on the active-listings-to-sales ratio, the housing market continued to be tight in 9 of the 10 provinces, with only Saskatchewan indicating a balanced market. These market conditions should continue to support prices in the coming months. On a year-over-year basis, home sales fell 16.3% compared to the most active month ever recorded for any period of the year that was March 2021. Nevertheless, it remains the second most active month of March on record. Housing starts decreased by 4.0K in March to 246.2K, a slide of 1.6% m/m from 250.2K in February and below consensus expectations calling for a 250K print. Although housing starts in March were slightly below consensus expectations, they remained high on a historical basis. The trend in housing permits continues to suggest a higher level of starts at this time. Moreover, with the tight conditions in the resale market, the willingness of various levels of government to build more and the resumption of immigration, housing starts should remain high for some time. That being said, we are entering the building season in Canada with elevated commodity prices and renewed supply chain challenges. Combined with more restrictive monetary policy by the Bank of Canada, we expect housing starts to taper in 2023. The Teranet-National Bank Composite Notional House Price Index increased 1.7% in February compared to January after seasonal adjustment. On a year-over-year basis, home price increased by 17.7% in February. All 11 markets of the composite index were up in the month. The March Teranet-National Bank HPI will be published on April 20. Source: National Bank of Canada https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf
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Bank of Canada increases policy interest rate by 50 basis points, begins quantitative tightening

4/13/2022

The Bank of Canada today increased its target for the overnight rate to 1%, with the Bank Rate at 1% and the deposit rate at 1%. The Bank is also ending reinvestment and will begin quantitative tightening (QT), effective April 25. Maturing Government of Canada bonds on the Banks balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time. Russias ongoing invasion of Ukraine is causing unimaginable human suffering and new economic uncertainty. Price spikes in oil, natural gas and other commodities are adding to inflation around the world. Supply disruptions resulting from the war are also exacerbating ongoing supply constraints and weighing on activity. These factors are the primary drivers of a substantial upward revision to the Banks outlook for inflation in Canada. The war in Ukraine is disrupting the global recovery, just as most economies are emerging from the impact of the Omicron variant of COVID-19. European countries are more directly impacted by confidence effects and supply dislocations caused by the war. Chinas economy is facing new COVID outbreaks and an ongoing correction in its property market. In the United States, domestic demand remains very strong and the US Federal Reserve has clearly indicated its resolve to use its monetary policy tools to control inflation. As policy stimulus is withdrawn, US growth is expected to moderate to a pace more in line with potential growth. Global financial conditions have tightened and volatility has increased. The Bank now forecasts global growth of about 3% this year, 2% in 2023 and 3% in 2024.
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VERICO Canada receives 5-Star Mortgage Employer award for second year in a row

4/8/2022

The size of companies represented in the survey ranged from 125 employees to 500+, with 43% of the brokerages having 26100 employees. Among the respondents, 50% were classified as brokerages, 36% were lenders, and the rest are in the technology, network, or other categories. This years 5-Star winners gained high scores for putting the working environment front and center, under what can only be characterized as extraordinary times, by focusing on what is best for brokers and, by extension, the clients they serve. As the survey showed, the winners made work-life balance, benefits and bonus compensation, a supportive working atmosphere, and a productive work culture their top priorities. The impressive 5-star accolade recognizes Canadas award-winning independent and storied brokerage, VERICO, for their outstanding contributions to the mortgage sector when it comes to career development, commitment to diversity and inclusion, and incentive and training programs, says Dino Di Pancrazio, Chief Strategy Officer, Head of Mortgage Division of M3 Mortgage. Read More: https://www.mpamag.com/ca/best-in-mortgage/5-star-mortgage-employers-2022/399366#winnersListSection
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February home sales rise as buyers scoop up first of the 2022 spring listings

3/28/2022

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were up in February 2022 as buyers jumped on the first batch of spring listings. Home sales recorded over Canadian MLS Systems climbed 4.6% between January and February 2022. The monthly increase in activity was likely the result of a rebound in new listings in February following big a decline in January. As such, stronger activity may persist as late-February new listings continue to sell in March. Sales were up in about 60% of local markets in February, led by some big jumps in Calgary and Edmonton, as well as a gain ahead of the national increase in the GTA. The actual (not seasonally adjusted) number of transactions in February 2022 came in 8.2% below the monthly record set in 2021. That said, as was the case in January and throughout the second half of 2021, it was still the second-highest level on record for that month.
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The continued reconfiguration of global supply chains

3/18/2022

Because of China-U.S. trade tensions and the pandemic, many corporations and governments had already made long-term plans to diversify supply chains and re-shore production in key sectors in order to break their reliance on geopolitical rivals for key goods. Russias invasion of Ukraine will accelerate this trend. One example of how recent sanctions will further rejig supply chains are U.S. restrictions on Russias ability to purchase such things as microchips, advanced machinery, and airplane parts. These measures apply not just to goods made in America, but also to those made in other countries with American technology.While China will no doubt step in to replace America in some of these areas, it cannot yet produce latest-generation semiconductors or provide spare parts for Western-made aircraft. It is important to note, also, that it will take Western countries many years to find or develop alternative sources for many of Russias commodity exports, particularly in the mineral sector. The International Energy Agency estimated that it takes more than 16 years on average to move mining projects from the discovery to the production phase.Europe has been an especially large consumer of Russian commodities, including copper, nickel, palladium, and titanium. Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/geopolitical-briefing-220315.pdf
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Bank of Canada increases policy interest rate

3/11/2022

The Bank of Canada increased its target for the overnight rate to %, with the Bank Rate at % and the deposit rate at %. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds on its balance sheet roughly constant until such time as it becomes appropriate to allow the size of its balance sheet to decline. The unprovoked invasion of Ukraine by Russia is a major new source of uncertainty. Prices for oil and other commodities have risen sharply. This will add to inflation around the world, and negative impacts on confidence and new supply disruptions could weigh on global growth. Financial market volatility has increased. The situation remains fluid and we are following events closely. Global economic data has come in broadly in line with projections in the Banks January Monetary Policy Report (MPR). Economies are emerging from the impact of the Omicron variant of COVID-19 more quickly than expected, although the virus continues to circulate and the possibility of new variants remains a concern. Demand is robust, particularly in the United States. Global supply bottlenecks remain challenging, although there are indications that some constraints have eased. Economic growth in Canada was very strong in the fourth quarter of last year at 6.7%. This is stronger than the Banks projection and confirms its view that economic slack has been absorbed. Both exports and imports have picked up, consistent with solid global demand. In January, the recovery in Canadas labour market suffered a setback due to the Omicron variant, with temporary layoffs in service sectors and elevated employee absenteeism. However, the rebound from Omicron now appears to be well in train: household spending is proving resilient and should strengthen further with the lifting of public health restrictions. Housing market activity is more elevated, adding further pressure to house prices. Overall, first-quarter growth is now looking more solid than previously projected.
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3 essential healthy credit card habits

2/24/2022

A credit card is only a benefit if you have a good relationship with your spending. Otherwise, your shiny new financial tool can quickly turn into a burden. How do you make sure that doesnt happen? Try these three key money habits. 1. Pay off your purchases When you use your credit card to make purchases, youre then responsible for paying it off. Each month, youll receive a statement outlining how much youve spent on your card and how much you need to pay off. Paying off the entire balance each month will help you avoid costly interest charges, but if you cant afford that, at least make the minimum payment to prevent a ding on your credit score. 2. Manage your credit utilization ratio Your credit cards limit is the maximum amount of debt you can carry at one time. Your limit will usually be between $1,000 and $10,000. You shouldnt spend right up to your credit cards limit, though. Getting too close to the limit will negatively affect your credit score due a calculation called your credit utilization ratio. Your credit utilization ratio is a measure of your credit card balance against your total credit limit. To maximize your credit score, keep your credit utilization ratio below 35%. For example, if you have a credit card with a $10,000 limit, try not to carry a balance higher than $3,500. 3. Choose the right credit limit Choose a credit limit that accurately reflects your spending habits. If you only plan to use your credit card for occasional purchases and online shopping, a few thousand dollars should be enough. If you spend thousands of dollars per month on it, pick a higher credit limit to keep your credit utilization ratio in check. Be realistic about how youll pay it back, as well. If you know that you occasionally carry a credit card balance and incur interest charges, choose a smaller credit limit to minimize the monthly interest youll pay.
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Canada's large urban centres continue to grow and spread

2/10/2022

In 2021, nearly three in four Canadians (73.7%) lived in one of Canadas large urban centres, up from 73.2% five years earlier. These large urban centres with a population of 100,000 or more people, referred to as census metropolitan areas (CMAs), accounted for most of Canadas population growth (+5.2%) from 2016 to 2021. Canada continues to urbanize as large urban centres benefit most from new arrivals to the country. From 2016 to 2019, Canada welcomed a record high number of immigrants and more than 9 in 10 settled in CMAs. There were six more CMAs in 2021 compared with five years earlier, another sign of the increasing urbanization of the country. Rapid population growth in cities is increasing the need for infrastructure, transportation and services of all kindsincluding front-line emergency services. Further urban spread also raises environmental concerns such as car-dependent cultures and encroachment on farmlands, wetlands and wildlife. Source:https://www150.statcan.gc.ca/n1/daily-quotidien/220209/dq220209b-eng.htm?HPA=1
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Bank of Canada maintains policy rate, removes exceptional forward guidance

1/26/2022

The Bank of Canada today held its target for the overnight rate at the effective lower bound of %, with the Bank Rate at % and the deposit rate at %. With overall economic slack now absorbed, the Bank has removed its exceptional forward guidance on its policy interest rate. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant. The global recovery from the COVID-19 pandemic is strong but uneven. The US economy is growing robustly while growth in some other regions appears more moderate, especially in China due to current weakness in its property sector. Strong global demand for goods combined with supply bottlenecks that hinder production and transportation are pushing up inflation in most regions. As well, oil prices have rebounded to well above pre-pandemic levels following a decline at the onset of the Omicron variant of COVID-19. Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated, and with rising geopolitical tensions. Overall, the Bank projects global GDP growth to moderate from 6 % in 2021 to about 3 % in 2022 and 2023.
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Bank of Canada/OSFI pilot helps Canadian financial sector assess climate change risks

1/21/2022

The Bank of Canada and Office of the Superintendent of Financial Institutions (OSFI) released the results of a pilot project on climate scenario analysis. This pilot was an important step in helping Canadas financial sector improve its ability to analyze economic and financial risks affecting financial institutions that could arise from climate change. Together with six Canadian financial institutions, the Bank and OSFI developed scenarios that will help the financial sector identify, measure and disclose climate-related risks. These scenarios were not intended to be forecasts or predictions. Rather, they were specifically designed to capture a range of potential outcomes and illustrate the kinds of stresses on the financial system and economy that could occur as the world transitions to a low-carbon future. All scenarios showed that this transition will entail important risks for some economic sectors. Mispricing of transition risks could expose financial institutions and investors to sudden and large losses. It could also delay investments needed to help mitigate the impact of climate change. source: https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/clrsk-mgm_nr.aspx
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Scotiabank Nowcast: Employment Gains Continued Prior to Omicron Spread, Q4-2021 GDP at 6.22%

1/7/2022

This note is part of a series that will be published after important data releases, documenting mechanical updates of the nowcast for Canadian GDP coming from the Scotiabank nowcasting model. The evolution of this nowcast will inform Scotiabank Economics official macroeconomic outlook. The Canadian labour market continued to power ahead in December according to Statistics Canadas labour force survey (LFS), with the net gain of +55K jobs for the month that brought the unemployment rate down to 5.9%, just 0.2 ppts above the level of February 2020. This bodes well for the overall Canadian GDP growth in December and is in line with our Q4-2021 estimate of +6.22% Q/Q SAAR. The timing of the survey (December 5 to 11) means that it largely missed the beginning of the spread of the Omicron variant and the late-December tightening in public health measures that occurred in response to it. The flooding in BC, a source of downside risk to the short term outlook, occurred after the LFS was completed in November. In December, however, the LFS picked up the beginning of the reconstruction phase, according to StatCan. As a result, we are not likely to find out the true impact of this disaster on the labour market until the November survey of employment, payrolls and hours (SEPH) is released in late January. With these caveats, the underlying picture of the labour market in Canada is one of continuing recovery. The ratio of employment to population (61.5%), the labour force participation rate (65.3%), the unemployment rate (5.9%) are all within 0.2 0.3 ppts of their respective February 2020 levels, signalling a rapid diminishing of the labour market slack. Even the ranks of those unemployed for 52 weeks or longer, while still significantly elevated at 293K (Feb 2020: 179K), continued to fall rapidly in December. The tightness in the labour market spurred a recovery in wages, which grew 2.7% y/y in December, although this increase was much weaker than the rate of inflation over the same period. While the spread of the Omicron variant will likely lead to short term weakness in employment, in particular in the high-contact industries that are subject to public health restrictions, it is already exacerbating labour shortages in essential services as scores of employees self-isolate having tested positive for the virus. With inflation running significantly above the Bank of Canadas inflation-control target range, the labour market slack essentially gone and wages picking up, the short term impact of the Omicron spread is unlikely to alter the Bank of Canada on its path to higher rates in 2022. Source: Scotiabank Global Economics
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OSFI maintains Qualifying rate at mortgage contract rate plus 2 percent or 5.25 percent

12/17/2021

The Office of the Superintendent of Financial Institutions (OSFI) confirmed that the minimum qualifying rate for uninsured mortgages will remain the greater of the mortgage contract rate plus 2 percent or 5.25 percent. In an environment characterized by increased household indebtedness and low interest rates, it is essential that lenders test their borrowers to ensure that mortgages can continue to be paid during more adverse conditions. This environment supports todays decision to maintain the current minimum qualifying rate. Mortgages are typically one of the largest exposures that banks carry on their balance sheets. Ensuring that borrowers can continue to repay their mortgage loans strongly contributes to the safety and soundness of Canadas financial system. OSFI reviews and communicates the minimum qualifying rate at least every December. Throughout the year, we will continue to monitor the appropriateness of the minimum qualifying rate and will make further adjustments, if conditions warrant.
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Bank of Canada maintains policy rate and forward guidance

12/10/2021

The Bank of Canada today held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Banks extraordinary forward guidance on the path for the overnight rate is being maintained. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant. The global economy continues to recover from the effects of the COVID-19 pandemic. Economic growth in the United States has accelerated, led by consumption, while growth in some other regions is moderating after a strong third quarter. Inflation has increased further in many countries, reflecting strong demand for goods amid ongoing supply disruptions. The new Omicron COVID-19 variant has prompted a tightening of travel restrictions in many countries and a decline in oil prices, and has injected renewed uncertainty. Accommodative financial conditions are still supporting economic activity. Canadas economy grew by about 5 percent in the third quarter, as expected. Together with a downward revision to the second quarter, this brings the level of GDP to about 1 percent below its level in the last quarter of 2019, before the pandemic began. Third-quarter growth was led by a rebound in consumption, particularly services, as restrictions were further eased and higher vaccination rates improved confidence. Persistent supply bottlenecks continued to inhibit growth in other components of GDP, including non-commodity exports and business investment.
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CANADA HOUSING MARKET: THE FALL’S RISE

11/18/2021

Canadian home sales rose by 8.6% (sa m/m) in October, the largest increase since July 2020. Listings moved in the same direction, albeit by a much smaller 3.2% (sa m/m). The larger increase in sales carried the sales-to-new listings ratio, an indicator of how tight the market is, to 79.5%, up from 75.5% in September, and much higher than its long-term average of 54.5%. As a result, the composite MLS Home Price Index (HPI) rose by 2.7% (sa m/m)the third consecutive acceleration, and the biggest, after months of price gains deceleration. Single-family homes and apartments were the main drivers of Octobers price gain. Movements in the market were broad-based, with the uptick in sales spread out across much of the country. Sales went up in 28 of 31 local markets we track. Kitchener-Waterloo recorded the largest increase (29.5% sa m/m) followed by Thunder Bay, Kingston, Okanagan-Mainline, and Winnipegall recording increases of over 15% (sa m/m). While these are mainly suburban secondary markets, primary markets are also showing signs of strength, with Torontos sales going up by 9.9% (sa m/m) and Montreals and Vancouvers by 7.8% (sa m/m). Octobers national level of sales is historically strongthe second highest on record for October after October 2020, and a remarkable 40% (sa) higher than the 20002019 October-average. source: https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-news-flash.november-15--2021.html
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Excess Household Savings and Implications for Inflation in Canada

11/8/2021

Canadians have built up a record amount of savings during the pandemic. By some estimates, it totals around $300 billion. This stockpiled spending firepower has fueled concerns that inflation could be higher and more persistent than currently thought, especially at a time of growing supply-side constraints. However, there are a few reasons to suggest the inflation impulse from excess savings may not be as hefty as some believe. The amount of funds in highly liquid cash form is significantly lower than the headline estimate, consumers are likely to gradually draw on their savings to spend, and the reorientation of outlays from goods to services will dampen price pressures. Still, the amount accumulated in savings is large and unprecedented. This represents an important upside risk to the Bank of Canadas consumption and inflation forecast in the October Monetary Policy Report. Source: https://economics.td.com/ca-excess-saving
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Canadian home prices continue to re-accelerate in September

10/25/2021

Home sales recorded over Canadian MLS Systems were up 0.9% between August and September 2021, marking the first monthover-month increase since March. The actual (not seasonally adjusted) number of transactions in September 2021 was down 17.5% on a year-over-year basis, from the record for that month set last year. That said, it was still the second-highest ever September sales figure by a sizeable margin. September provided another months worth of evidence from all across Canada that housing market conditions are stabilizing near current levels, said Cliff Stevenson, Chair of CREA. In some ways that comes as a relief given the volatility of the last year-and-a-half, but the issue is that demand/supply conditions are stabilizing in a place that very few people are happy about. There is still a lot of demand chasing an increasingly scarce number of listings, so this market remains very challenging. Thats why your best bet is to consult with your local REALTOR for information and guidance about navigating the current market, continued Stevenson.
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Residential permits continue to trend down since March peak

10/7/2021

Residential permits decreased 8.3% to $6.4 billion in August, the lowest level since March. Ontario and British Columbia drove most of the decline. Construction intentions for multi-family units fell 15.9%, largely reflecting Ontarios decline (-24.3%). This was despite the approval of high value condominium projects in the city of Toronto. In contrast, single family intentions were up slightly (+1.2%), led by a 15.7% gain in Quebec. Additionally, Newfoundland and Labrador (+0.7%) reported the first provincial increase in this component after six consecutive monthly declines.
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Price growth continues to decrease in August

10/1/2021

In August, the TeranetNational Bank National Composite House Price IndexTM was up 1.0% from the previous month. It is now the third consecutive month in which the monthly price increase is lower than the previous month (2.8% in May, 2.7% in June and 2.0% in July). The August index was led by six of the 11 constituent markets: Ottawa-Gatineau (2.1%), Hamilton (1.7%), Montreal (2.1%), Quebec City (1.3%), Winnipeg (1.3%) and Victoria (1.3%). Growth was equal to the national average in Halifax (1.0%), while it was more moderate in Vancouver (0.8%), Calgary (0.8%), Toronto (0.7%) and Edmonton (0.6%). This is the sixth consecutive month in which gains were observed in all regions included in the composite index. The slowdown in price growth can be linked to the slowdown in housing sales reported in recent months by the Canadian Real Estate Association. In fact, when analyzing the 12-month growth in the number of sale pairsused to calculate the 11 metropolitan indices, this is the first time in twelve months that they have not increased in all cities. Moreover, this slowdown in price is expected to continue in the coming months as the unsmoothed composite index adjusted for seasonal effects rose only 0.1% from July. Source: https://housepriceindex.ca/2021/09/august2021/
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Bank of Canada maintains policy rate, continues forward guidance and current pace of quantitative easing

9/13/2021

The Bank of Canada on September 8th held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Banks quantitative easing (QE) program, which is being maintained at a target pace of $2 billion per week. The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter. However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative. In Canada, GDP contracted by about 1 percent in the second quarter, weaker than anticipated in the Banks July Monetary Policy Report (MPR). This largely reflects a contraction in exports, due in part to supply chain disruptions, especially in the auto sector. Housing market activity pulled back from recent high levels, largely as expected. Consumption, business investment and government spending all contributed positively to growth, with domestic demand growing at more than 3 percent. Employment rebounded through June and July, with hard-to-distance sectors hiring as public health restrictions eased. This is reducing unevenness in the labour market, although considerable slack remains and some groups particularly low-wage workers are still disproportionately affected. The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery. CPI inflation remains above 3 percent as expected, boosted by base-year effects, gasoline prices, and pandemic-related supply bottlenecks. These factors pushing up inflation are expected to be transitory, but their persistence and magnitude are uncertain and will be monitored closely. Wage increases have been moderate to date, and medium-term inflation expectations remain well-anchored. Core measures of inflation have risen, but by less than the CPI. The Governing Council judges that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support. [The Bank of Canada] remains committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Banks July projection, this happens in the second half of 2022. The Banks QE program continues to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding future adjustments to the pace of net bond purchases will be guided by Governing Councils ongoing assessment of the strength and durability of the recovery. [The Bank of Canada] will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective. Information note The next scheduled date for announcing the overnight rate target is October 27, 2021. The next full update of the Banks outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time. Source: Bank of Canada
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Ontario weighs down residential permits nationally

9/7/2021

The total value of building permits in Canada decreased 3.9% to $9.9 billion in July. All provinces except British Columbia and Newfoundland and Labrador posted lower values, with the majority of the national decline reported in Alberta (-23.4%). Building permits fell 3.1% in the residential sector and 5.6% in the non-residential sector. On a constant dollar basis (2012=100), building permits fell 3.8% to $7.0 billion. Seven provinces reported declines in the residential sector, led by Ontario (-10.5%). Single-family permits fell 9.6% in July, with two provinces showing growth. Ontario (-9.1%) contributed the most to the decrease. Construction intentions for multi-family units rose 2.7% in July. British Columbia posted an increase of 55.1%, which was driven by high-valued condo projects in the city of Surrey. In contrast, Ontario reversed strong growth in June (+67.6%) and fell 11.7% in July due to fewer high-valued condo permits reported for the census metropolitan areas (CMA) of Hamilton and Guelph.
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Labour Force Survey, July 2021

8/19/2021

July Labour Force Survey (LFS) data reflect labour market conditions during the week of July 11 to 17. Between the June and July reference weeks, many jurisdictions substantially eased public health restrictions affecting indoor and outdoor dining, recreation and cultural activities, retail shopping, and personal care services. All public health restrictionsaside from some masking and screening requirements in select settingswere lifted in Alberta (July 1) and Saskatchewan (July 11). British Columbia also lifted virtually all restrictions (July 1), although some capacity limits on certain activities remained. All regions of Quebec moved into the lowest level of restrictions (June 28), followed by a removal of retail capacity limits (July 12). In Ontario, personal care services partially resumed at the end of June, and the province reopened indoor dining and permitted recreational activities, with certain limitations, at the end of the LFS reference week (July 16). In Manitoba, personal care services and restaurants reopened at the end of June, and capacity limits on restaurants, gyms, and retail stores were further eased on July 17.
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Ontario residential permits bounce back

8/9/2021

The total value of building permits rose 6.9% to $10.3 billion in June. Seven provinces contributed to the gain, led by Ontario, which jumped 22.7%. Construction intentions in the residential sector were up 9.1%, while the non-residential sector advanced 2.2%. On a constant dollar basis (2012=100), building permits increased 5.2% to $7.2 billion. High-value permits for new apartment buildings in the census metropolitan areas (CMA) of Toronto and Hamilton helped push multi-family permits up 13.5% to $3.7 billion nationally in June. Provincially, Ontario led the way, rebounding 67.8% to $1.8 billion. On the other hand, Quebec reported the largest decrease (-29.9%), pulling back from a record high in May. Construction intentions for single-family dwellings increased 4.7% to $3.4 billion. Seven provinces saw gains in this component, led by Ontario and Alberta. Overall, the value of residential building permits increased 9.1% to $7.2 billion, following two months of lower construction intentions.
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Housing market continues to moderate in June

7/16/2021

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were down between May and June 2021. Home sales recorded over Canadian MLS Systems fell by 8.4% month-over month in June 2021, marking the third straight monthly slowdown since activity hit an all-time record back in March. While sales are now down a cumulative 25% from their peak, and below every other month in the last year, June transactions still managed to set a record for that month. Month-over-month declines in sales activity were once again quite broad-based, with sales moderating in around 80% of all local markets, including almost all large markets across Canada. The actual (not seasonally adjusted) number of transactions in June 2021 was up 13.6% on a year-over-year basis and marked a new record for that month. While there is still a lot of activity in many housing markets across Canada, things have noticeably calmed down in the last few months, said Cliff Stevenson, Chair of CREA. There remains a shortage of supply in many parts of the country, but at least there isnt the same level of competition among buyers we were seeing a few months ago. As these conditions continue to evolve over the summer and fall, your best bet is to consult with your local REALTOR for information and guidance about buying or selling a home at this stage in the cycle, continued Stevenson.
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Record rise of home prices in May

7/7/2021

In May the TeranetNational Bank National Composite House Price IndexTM was up 2.8% from the previous month, the largest monthly rise since the index series began in 1999. It was led by four of the 11 constituent markets: Ottawa-Gatineau (4.9%), Halifax (4.3%), Hamilton (3.7%) and Toronto (3.4%). Rises were more moderate for Vancouver (2.3%), Winnipeg (2.2%), Montreal (2.2%), Victoria (2.1%), Calgary (1.4%), Quebec City (1.2%) and Edmonton (1.2%). It was a third consecutive month in which all 11 markets of the composite index were up from the month before. The May rise was consistent with the increase in number of home sales over the last several months as reported by the Canadian Real Estate Association. For a ninth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 2.1% in May, suggesting that the uptrend of the published (smoothed) index could continue. The May composite index was up 13.7% from a year earlier, for a 10th consecutive acceleration and the strongest 12-month gain since July 2017. The 12-month rise was led by five markets Halifax (29.9%), Hamilton (25.5%), Ottawa-Gatineau (22.8%), Montreal (17.6%) and Victoria (15.3%). Toronto matched the countrywide average at 13.7%. Lagging that average were Vancouver (11.9%), Winnipeg (10.4%), Quebec City (9.8%), Calgary (4.5%) and Edmonton (3.6%). Besides the Toronto and Hamilton indexes included in the countrywide composite, indexes exist for seven smaller urban areas of the Golden Horseshoe Barrie, Guelph, Brantford, Kitchener, St. Catharines, Oshawa and Peterborough. In May all seven were up from the previous month and from a year earlier. The 12-month gains ranged from 27.6% for Brantford to 31.4% for Barrie. Source: https://housepriceindex.ca/2021/06/may2021/
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Similar Housing Demand Conditions in Canada and US

6/3/2021

Housing markets in Canada and the US are sizzling. Recent headlines have used superlatives to describe housing market conditions in both countries and the data do back this up. Still, a closer look reveals some interesting distinctions as well. Home price and sales metrics show that while the US market is hot, Canadas is hotter. For example, existing home sales, which make up the majority of overall sales in both countries, is well above historical averages, but Canadian home sales have outperformed. As of March 2021, home sales in Canada were 75% higher than the average over 2018 and 2019, while it was 13% above in the US. Likewise, home prices also spiked. In Canada, the average home sold was 32% more expensive than what it was a year ago, and it was 17% higher stateside. From a high level, the list of commonalties across markets during the pandemic is longer than the areas of difference, particularly on the demand side. Perhaps the most influential demand-side driver has been historically low mortgage rates. Responding to the impacts of the pandemic, the Bank of Canada and the Federal Reserve slashed rates and enacted large quantitative easing programs early last year, resulting in a sharp drop in borrowing costs. Given that the US conventional mortgage rate is a 30-year rate compared to Canadas 5-year benchmark, borrowing costs fell faster in America as flight to safety flows lowered longer term yields at the onset of the pandemic. Source:https://economics.td.com/housing-heat-check
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CANADA HOUSING MARKET and new stress test

5/27/2021

Canadian home sales took a turn in April 2021, declining by 12.5% (sa m/m) from the highest level on record in March 2021. Listings followed suit, falling by 5.4% (sa m/m). While both sales and listings decreased in April, the smaller decline in listings further eased the national-level sales-to-new listings to 75.2% from record high readings earlier this year (the highest being 91% in January). While this is a move in the right direction towards a better supply-demand balance, the ratio is still significantly higher than its long-term average of 54.5%. As a result of this persistent tightness in the housing market, the composite MLS Home Price Index (HPI) rose by 2.4% (sa m/m). This is a deceleration in price gains from paces observed over the last two months, owing in the most part to a slowing in prices for single-family homes and townhouses. Apartments, which had remained relatively close to pre-pandemic levels before accelerating earlier this year have maintained momentum in April. Movements in the housing market this month continued to be broad-based rather than market-specific, as declines in sales were spread out across much of the country. The Office of the Superintendent of Financial Institutions (OSFI) also announced that, effective June 1, the minimum qualifying rate for uninsured mortgages (i.e., residential mortgages with a down payment of 20 percent or more) will be the greater of the mortgage contract rate plus 2 percent or 5.25 percent.
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Scotiabank: Why Canada needs to focus on ways to encourage more home building

5/14/2021

The recent run-up in housing prices, and the attendant worries about affordability and accessibility, have many stakeholders scrambling to find quick solutions. While understandable, those approaches are likely to have only minimal impacts on Canadas housing situation and its consequences for people looking for a reasonably priced place to live. Focusing on interest rate policy or macroprudential instruments, such as stricter mortgage stress tests, draws attention away from the underlying cause of the problem: the inability of supply to meet demand. Put simply, this country doesnt build enough housing. We should not be surprised by this. Canada has increased immigration dramatically in recent years to tremendous benefit to the economy, but we failed to pro-actively address the housing challenges the consequent population boom was sure to bring. Policy efforts must focus far more on anticipatory, collaborative, multistakeholder and very specific solutions to the housing situation rather than on the short-term and ultimately ineffective macroprudential Band-Aids applied in recent years. Scotiabank Economics is publishing research this week looking at the increase in Canadas housing stock relative to the increase in population over the past several years to get a sense of how effective we have been in creating new units. The numbers are not encouraging. One way to look at it is by using the ratio of new housing to population growth. By that measure, construction has been well below its historical average since mid-2017. That is perhaps not surprising, given that Canada has seen an immigration-fuelled population boom since 2015. In the three years leading up to the COVID-19 pandemic, population grew nearly twice as fast as new housing units were being built. That ratio improved somewhat with the COVID-related stall in immigration, but it is likely to reverse course once immigration returns to planned levels. Dan Rees is group head, Canadian banking at the Bank of Nova Scotia. Jean-Franois Perrault is Scotiabanks chief economist
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Two-thirds of Canadians were asset resilient in the year prior to the pandemic

5/10/2021

Just over two-thirds (67.1%) of Canadians were asset resilient for at least three months in 2019, up from 63.6% in 1999. Over these two decades, several factors contributed to the overall rate of asset resilience. For one thing, Canadians held more liquid assets at the end of the period. Median person-adjusted household liquid assets rose from $6,300 in 1999 to $10,700 in 2019. Canadians were also slightly older, on averagethe median age of Canadians increased from 36.4 years to 40.8 years. Family income has also been rising since 1999, and asset resilience is associated with higher income. The median person-adjusted, household after-tax income of Canadians increased by one-third (+34.9%), rising from $37,300 in 1999 to $50,300 in 2019, while the share of Canadians below the LIM-AT edged down from 12.4% to 12.1%. source: https://www150.statcan.gc.ca/n1/daily-quotidien/210504/dq210504e-eng.htm
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Big jump in home prices in March

4/23/2021

The Teranet-National Bank HPI jumped 1.5% to a new high in March, its 17th straight monthly rise. Its recent vigour coincides with historically high numbers of home sales in most regions of Canada, coupled with limited supply. The monthly jump of the unsmoothed HPI was even bigger 2.7%, the most of any month since July 2006, taking the unsmoothed index to a cumulative rise of 11.9% since last June (left chart). The rapid rise of home prices continues in the great majority of large Canadian cities, with prices up 10% or more from a year earlier in an unprecedented 81% of the 32 urban markets surveyed (right chart). However, the magnitude of the price rise varies with category of dwelling. In the main metropolitan markets the rise was much smaller for the condo segment than for single-family homes. Among the reasons for the difference is a shift of preferences away from small dwellings in city centres toward larger homes in suburbs. Source: https://housepriceindex.ca/2021/04/march2021/
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How to tell between a real CRA call and a scam

4/1/2021

(NC) Many of us have heard of scammers pretending to be from the Canada Revenue Agency. You may have even received a call or email yourself. But how do you know what you can trust? Avoiding this common scam is easier when you know what the agency will and wont do. The agency will never threaten you with immediate arrest or jail for a tax debt, and never uses text or instant messaging to communicate about taxes. It will never demand that you settle tax debt by buying gift cards or prepaid credit cards, or using cryptocurrency like Bitcoin, or offer to pay you a refund by e-transfer. Remain vigilant when you receive communication from someone claiming to be from the CRA, especially when asked for personal information such as a social insurance, credit card, bank account or passport number. If you are unsure that the person on the phone is a legitimate agency employee, ask for the agents phone number and badge number and call 1-800-959-8281 to validate the caller. If you receive a call demanding immediate payment, take time to think it over. If you believe it was legitimate, you can check the status of your account online. If you use online or telephone services, you can further protect yourself by keeping your access codes, user ID, passwords and PINs secret, and changing them frequently. Enabling email notifications for online CRA accounts will notify you by email of changes to them, warning you of potentially fraudulent activity. Finally, suspicious phone calls or messages can be reported to the Canadian Anti-Fraud Centre online or by telephone. If you think you have fallen victim to a scam, contact your local police. Find more information at canada.ca/taxes. www.newscanada.com
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Home prices accelerate in February

3/25/2021

In February the TeranetNational Bank National Composite House Price IndexTM was up 0.5% from the previous month, an acceleration from the January increase after three consecutive months of slowing. The advance was led by four of the 11 constituent markets: Halifax (2.3%), Hamilton (1.1%), Vancouver (0.8%) and Quebec City (0.7%). Rises of less than the countrywide average were reported for Montreal (0.5%), Victoria (0.4%), Calgary (0.4%) and Toronto (0.4%). The index for Winnipeg was flat on the month. Down from the month before were the indexes for Edmonton (0.1%) and Ottawa-Gatineau (0.5%). After three months, from September to November last fall, in which all 11 markets of the composite index were up from the month before, February was a third consecutive month in which one or more markets were down on the month. The February rise is consistent with the increase in the number of home sales over the last several months reported by the Canadian Real Estate Association. For a sixth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 1.1% in February, suggesting that the uptrend of the published (smoothed) index could persist. Source: National Bank
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Bank of Canada will hold current level of policy rate until inflation objective is sustainably achieved, continues quantitative easing

3/12/2021

The Bank of Canada held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week. The global economy is recovering from the economic effects of COVID-19, albeit with ongoing unevenness across regions and sectors. The US economic recovery appears to be gaining momentum as virus infections decline and fiscal support boosts incomes and consumption. New fiscal stimulus will increase US consumption and output growth further. Global yield curves have steepened, largely reflecting the improved US growth outlook, but global financial conditions remain highly accommodative. Oil and other commodity prices have risen. The Canadian dollar has been relatively stable against the US dollar, but has appreciated against most other currencies. In Canada, the economy is proving to be more resilient than anticipated to the second wave of the virus and the associated containment measures. Although activity in hard-to-distance sectors continues to be held back, recent data point to continued recovery in the rest of the economy. GDP grew 9.6% in the final quarter of 2020, led by strong inventory accumulation. GDP growth in the first quarter of 2021 is now expected to be positive, rather than the contraction forecast in January. Consumers and businesses are adapting to containment measures, and housing market activity has been much stronger than expected. Improving foreign demand and higher commodity prices have also brightened the prospects for exports and business investment.
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Index growth slows further in January

2/25/2021

In January the TeranetNational Bank National Composite House Price IndexTM was up 0.3% from the previous month. It was the third consecutive month in which the index rose less than the month before. The increase was led by five of the 11 constituent markets: Hamilton (2.0%), Montreal (1.0%), Victoria (0.6%), Halifax (0.4%) and Vancouver (0.4%). Rises of less than the countrywide average were reported for Quebec City (0.3%) and Ottawa-Gatineau (0.1%). Indexes were down from the month before in Toronto (0.1%), Calgary (0.2%), Edmonton (0.4%) and Winnipeg (0.4%). After three months September, October, November in which all 11 markets of the composite index were up from the month before, it was a second consecutive month in which one or more markets were down on the month. The price rise is consistent with the rise of home sales volume over the last several months as reported by the Canadian Real Estate Association. For a fifth straight month, the number of sale pairs[1] entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 0.9% in January, suggesting that the published (smoothed) index could continue its uptrend.
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Canadian home sales continue their momentum to start 2021

2/19/2021

In January, Canadian home sales increased 2.0% month-on-month, building on Decembers 7.0% gain. On a year-on-year basis, they were up 35.2%. Provincially, sales were up in 8 of 10 provinces in January, with strong gains recorded in PEI (+20.5% m/m) and Alberta (+11.9%). On the flipside, a relatively steep decline was recorded in Nova Scotia (-8.3%). New listings dropped by 13.5% m/m in January. The combination of rising sales and falling new listings brought the months supply of inventory measure to under 1.9 months. The national sales-to-new listings ratio also increased to 90.7% its highest level by far. Every province was in sellers territory in December, and many of those in the eastern part of Canada had ratios over 100% (Quebec: 128.3%; New Brunswick: 116.0%; Nova Scotia: 114.3% and PEI:101.5%). This means that there were more sales than new units listed last month in these provinces. This is a rare situation, but has occurred before in the Atlantic Provinces. However, January marked a first on this front in Quebec. Elsewhere, ratios were particularly elevated in Manitoba (86.1%) and Ontario (88.6). Strong demand and historically tight conditions were reflected in prices. Indeed, Canadian average home prices surged by 4.7% m/m in January. On a year-on-year basis, they were up 22.8%, marking an acceleration from December. However, prices were up in 8 of 10 provinces during the month, with the largest gains occurring in Alberta (+8.1%) and Ontario (7.4%). Compared with the average sales price, the MLS home price index, a more like for like measure, increased 2.0% m/m. Single family home prices rose 2.6% m/m (and a robust 17.4% y/y), whereas apartment prices advanced by a smaller 0.2% m/m (and decelerated to 3.3% y/y). In Toronto, apartment prices increased 0.4% m/m, the first gain in 4 months. Key Implications Home sales picked up right where they left off to start 2021. Demand was likely given a lift by ultra-low mortgage rates, which dropped again during the month. Januarys robust gain coupled with a strong handoff into this year virtually ensures that sales will increase in the first quarter. However, with sales likely running above fundamentally-supported levels, we think some cooling in activity will take place, especially in the second half. A dwindling supply of inventories, when benchmarked against the current sales pace, could also weigh on activity moving forward. With todays data showing a solid gain in prices last month and new supply collapsing across nearly the entire country, markets were historically tight. This points to further strong price gains ahead in the near-term. Also notable was that benchmark condo prices grew for the first time in several months in Toronto. Although supply remains elevated, conditions are becoming tighter than what we saw last fall. This suggests that further gains are in store. Source: https://economics.td.com/ca-existing-home-sales
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5 ideas for families to make the most of staying home this March Break

2/5/2021

(NC) Due to current travel restrictions, families will be spending March Break at home. One way to keep your kids busy is by making personal finance a group activity. Research shows that young people who discuss money matters with their parents have higher financial knowledge and skills, which leads to stronger financial well-being in the future. Here are five ideas for simple things you can do with your kids to help them develop good money habits early: Involve your children in age-appropriate conversations about news related to economics or budgeting, and discuss how the family is responding to the unprecedented circumstances caused by the pandemic. Use the Financial Consumer Agency of Canadas online interactive budget Planner to teach your children about the importance of a financial plan. Try making a budget for your next family vacation. Encourage your child to set up a savings account. Forming good savings habits early can help kids learn how to be financially independent and avoid relying on credit cards and loans in the future. Help your child to make a plan to save for something they really want, like a new toy or video game. Show your child how to set up an automatic payment for either a subscription or their cellphone. This is an opportunity teach them about the importance of never missing a payment, which could have a negative impact on their credit report in the future. Review your childs bank account agreement with them and make sure they understand their responsibilities, such as keeping their PIN secret, even from their parents. Sharing their PIN means they may not be protected from a fraudulent transaction on their account. Understanding personal finances can have a big impact on the present and future well-being of young people. No matter what life stages your child is at, you can find unbiased and fact-based information from the Financial Consumer Agency of Canada at canada.ca/money.
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Record December caps record year for Canadian home sales

1/22/2021

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales set another all-time record in December 2020. Home sales recorded over Canadian MLS Systems jumped by 7.2% between November and December to set another new all-time record. Seasonally adjusted activity was running at an annualized pace of 714,516 units in December 2020 the first time on record that monthly sales at seasonally adjusted annual rates have ever topped the 700,000 mark. The month-over-month increase in national sales activity from November to December was driven by gains of more than 20% in the Greater Toronto Area (GTA) and Greater Vancouver. Actual (not seasonally adjusted) sales activity posted a 47.2% y-o-y gain in December the largest year-over-year increase in monthly sales in 11 years. It was a new record for the month of December by a margin of more than 12,000 transactions. For the sixth straight month, sales activity was up in almost all Canadian housing markets compared to the same month in 2019. For 2020 as a whole, some 551,392 homes traded hands over Canadian MLS Systems a new annual record. This is an increase of 12.6% from 2019 and stood 2.3% above the previous record set back in 2016.
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